Ukraine can replace the production of iron and steel of the Russian Federation in Europe for $74 million every month

By substituting Russian suppliers on the EU market, Ukraine can increase the export of iron and steel products by $74 million per month. This is taking into account the volumes of iron ore and pig iron supplied by Russian companies to the EU market last year and the production capacities that remained on the territory controlled by Ukraine. Stanislav Zinchenko, CEO of GMK Center, told about it at the open hearings of the Verkhovna Rada Committee on Economic Development on the topic: «Substitution of imports from the Russian Federation and the Republic of Belarus by Ukrainian goods in Ukraine, the EU and the world».

“The maximum possible potential for increasing the export of iron ore and pig iron, according to our calculations, is $230 million every month. This is provided that the steel enterprises that remained in the controlled territory of Ukraine will be able to restore production to pre-war levels,” explained the CEO of GMK Center.

According to him, several issues need to be resolved in order to increase the export of steel products.

1. Unblocking Ukrainian seaports for steel products. Without unblocked ports, steelmakers will not be able to increase exports – European ports are not capable of processing such volumes of products that can be supplied from Ukraine.
2. Increasing the capacity of border railway crossings with the EU. The nominal carrying capacity is 3,400 wagons, and the actual capacity, according to our calculations, is only 1,800 wagons. Wagons can be idle for up to two weeks in the queue for the borders. Ukrzaliznytsia is trying to solve the problem at the expense of restrictions – so-called conventions on the transportation of iron and steel cargo. As a result, enterprises lose export opportunities.
3. Stabilization of energy supply remains an important problem. We understand that certain steps in this direction are already being taken.
4. It is necessary to strengthen diplomatic efforts aimed at displacing Russian products from the European market. In 10 months of 2022, Russia exported 2.4 million tons of iron ore and 1 million tons of pig iron to the EU. Their total value was almost $1 billion.

“European producers will buy Russian products as long as there is such a legal possibility. It is profitable to buy Russian now, because Russian steelmakers offer discounts (from 10% to 30% of world prices),” Stanislav Zinchenko emphasized.

As GMK Center reported earlier, many sanctions against Russian steel sector did not achieve their goal – the European market remained open for raw materials from the Russian Federation, the USA introduced minimal bans

In general, according to GMK Center’s research, the amount of losses from the blockade of sea ports reaches $420 million per month. Every month, Ukraine cannot produce and export 1.3 million tons of iron ore, 151,000 tons of pig iron, 192,000 tons of semi-finished products, and 218,000 tons of finished steel products.